IS BITCOIN ON ITS WAY TO BEING LEGITIMISED IN AUSTRALIA?

Australia is following the steps of countries like Japan as it edges a little closer to legitimising Bitcoin and other digital/crypto currency by recognising its existence in law.

On 7 December 2017 the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2017 was passed by the Australian Senate. The Bill expanded the objectives of the Anti‑Money Laundering and Counter‑Terrorism Financing Act 2006 (Cth) (the “Act”) to include the regulation of digital currency exchange providers.

The purpose of the Act is apparent in its name: to prevent and minimise money laundering and the financing of terrorist acts. It creates obligations on businesses regulated by the Act (like financial, gambling, remittance and bullion services) to carry out identification procedures on its customers and to conduct other due diligence.

The regulatory body overseeing the compliance and reporting requirements of businesses under the Act is the Australian Transaction Reports and Analysis Centre (AUSTRAC).

How do the changes affect Bitcoin?

The recent amendments of the Act now requires digital currency exchange services to be registered with AUSTRAC. Like banks and other financial service providers, digital currency exchange services who trade in Bitcoin will need to adopt systems and procedures to prevent money laundering and terrorism financing. Those digital currency exchange service providers will need to verify the identities of their customers, report to AUSTRAC on any suspicious matters, international transactions, and other transactions involving physical currency that exceeds $10,000.00.

The Act now also defines digital currency to mean a digital representation of value that:

functions as a medium of exchange, a store of economic value, or a unit of account;

is not issued by or under the authority of a government body;

is interchangeable with money (including through the crediting of an account) and may be used as consideration for the supply of goods or services; and

is generally available to members of the public without any restriction on its use as consideration.

The implications of the amendments to the Act means that Bitcoin and other digital currencies are slowly being treated by Australian lawmakers as something to be regarded as legitimate with a real financial impact, even if the purpose is to prevent crime. It will be interesting to see what other steps the Australian government will take on how it recognises Bitcoin and other digital currencies.

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